In his second "Executive Decision" segment of Mad Money Wednesday night, Jim Cramer also sat down with Anthony Wood, chairman and CEO of Roku, Inc. (ROKU) , the streaming media provider. The share price of ROKU is up 31% this month alone.
Wood said that streaming media is more popular than ever and about half of Roku users don't have a cable TV package at home. He said Roku is the No. 1 streaming provider in the country, and provides customers with a purpose-built experience with more choices than ever before.
Wood added that not all streaming media is paid. He said many customers buy a $29 device from Roku and only stream free content.
When asked about all of the new streaming services coming soon, Wood explained that each new service only brings more people to the streaming world and he welcomes competition. That's the quick and dirty on the fundamental story, let's take a look at the charts and indicators.
In this daily bar chart of ROKU, below, we can see that prices broke out to new highs earlier this month eclipsing the peaks of October and March. ROKU is above the strongly rising 50-day moving average line and the bullish 200-day moving average. In March we can see a bullish golden cross of these two indicators.
The volume pattern has been very strong since January and the daily On-Balance-Volume (OBV) line shows a bullish rise this year. The trend-following Moving Average Convergence Divergence (MACD) oscillator is in a bullish configuration above the zero line.
In this weekly bar chart of ROKU, below, we do not have three years of history to work with but we can see the strong upside move and breakout to new highs last week. Prices are clearly above the rising 40-week moving average line.
The weekly OBV line has made new highs with price and confirms the breakout.
The weekly MACD oscillator weakened in April but has turned upwards again this month.
In this Point and Figure chart of ROKU, below, we can see an upside price objective of $92. A decline to $78 will weaken this chart.
Bottom line strategy: This week ROKU has been consolidating (read: catching its breadth) the sharp gains of last week. This pattern is a bullish pennant formation and typically leads to still higher prices. Aggressive traders should trade from the long side looking for gains to $92 and maybe $100. Risk below $78.